Since April 1, 2022, India has had a specific tax framework for Virtual Digital Assets (VDAs) — including cryptocurrencies like Bitcoin, Ethereum, and NFTs. The rules are clear but strict: 30% flat tax, no deductions (except cost of acquisition), no loss set-off, and 1% TDS on every transaction above threshold. Here's how crypto is taxed for FY 2025–26.
Key Rules Under Section 115BBH (Crypto Tax)
- 30% flat tax on profit from transfer of VDA — no benefit of slab rates
- Only deduction allowed: cost of acquisition (the original purchase price of the crypto)
- No deduction for mining costs, electricity, transaction fees, or other expenses
- Loss from VDA cannot be set off against any other income (salary, capital gains, business)
- VDA loss cannot be carried forward to the next year
- Applies to all VDAs: Bitcoin, Ethereum, Altcoins, NFTs, Gaming tokens, DeFi tokens
1% TDS on Crypto Transactions (Section 194S)
From July 1, 2022: Whoever pays you for crypto must deduct 1% TDS if the annual transaction value exceeds ₹10,000 (₹50,000 for specified persons). Crypto exchanges (CoinDCX, WazirX, CoinSwitch etc.) deduct this TDS when you sell crypto on their platform. The TDS appears in your Form 26AS. You can claim TDS credit when filing ITR — if total tax < TDS paid, you get a refund.
Crypto Tax Calculation Examples
| Scenario | Calculation |
|---|---|
| Buy Bitcoin at ₹20L, sell at ₹30L | Profit = ₹10L. Tax = 30% × ₹10L = ₹3L + cess |
| Buy ETH at ₹5L, sell at ₹3L (loss) | Loss = ₹2L. CANNOT set off. No tax on loss but no benefit either |
| Crypto-to-crypto swap (e.g., BTC→ETH) | Treated as sale of BTC + purchase of ETH. Tax on BTC appreciation at 30% |
| Mining income | Taxed as income from other sources at slab rate (not 30%) |
| Receiving crypto as salary/payment | FMV on date of receipt = salary/business income at slab rate |
| NFT sale profit | 30% tax — same as VDA |
How to Report Crypto in ITR
- Use ITR-2 (if only capital gains + salary) or ITR-3 (if business income + crypto)
- Under 'Schedule VDA' (Virtual Digital Assets) — enter each transaction: date of purchase, cost, date of sale, sale value, profit
- Source your transaction history from exchange CSV download (Binance, WazirX, CoinDCX etc.)
- Check Form 26AS for TDS deducted on crypto sales — claim the credit
- Do NOT report crypto under 'Capital Gains Schedule' — it goes specifically in 'Schedule VDA' (introduced AY 2023-24)
Note: Crypto received as a gift from non-relatives worth > ₹50,000 is also taxable as income from other sources. Unlike regular gifts, the ₹50,000 threshold applies per gift (not aggregate for the year). Report in Schedule OS (Other Sources).